scheming a takeover

Why would anyone in their right mind run a Scheme for this deal?

You need 75% for the win.
You hold 12% which is ineligible
You know Chris Cooper is on 11% and wants revenge....

This means you need 75% of (100% - 12%) = 88%
and you know only 77% of that will possibly vote for you.

i.e. you really need 86%.

Compulsory Takeover threshold is 90% for a takeover by the way.

Plan B is to run the takeover with a big red bold sticker on page 1 saying If I win I will do a massive rights issue to fund capex and growth and then move to delist. 50% (really 50% - 12%) = 38% is needed for control - and that assumes everyone will vote for the new board appointments.

Control would have been easily delivered with yesterday's vote. Now the bidders could be debating whether to go unconditional.... with the spectre of a a diluting rights issue, delisting, LBO gearing levels and no dividends hanging over the heads of all shareholders. I mean how many of you would stick around if RDF was to delist and pay no dividends?

Assuming MQG and Carlyle eventually ended with 80%, then there is Chris Cooper on 11% and "Others" on 9%. MQG and Carlyle are financial buyers who do not require 100% to extract their synergies. To get to 90% the company could do an insto placement or rights issue say 6 to 12 months down the track.

They could do this before they delist at a post deal shareprice (which would likely collapse given the impending delisting: Who would buy other than MQG and Carlyle; and they could not buy due to creeping takeover limitations. This would produce maximum dilution.

RDF's CapEx is 50% of EBITDA so we could justify $50 to $100m of nice dilutory capital unaffordable by Chris Cooper or other shareholders. And if they can afford it come back for another round. [even Jamie Packer gave up funding PBL.] At which point MQG and Carlyle's rights entitlements would give them the 90% they need to trigger compulsory acquisition. (using effectively a zero dollar per share price (because they get control of the cash) to get themselves to 90% and a much lower price than the $2.75 takeover (the collapsed share price) to acquire the dregs of what used to be Chris Cooper's 11%.

If this were a takeover I say the deal would be done. Someone (Caliburn, Macquarie Bank and/or Carlyle) screwed up royally.